Is Biden's crypto legacy a boon to Trump?

Author: Alex O’Donnell, CoinTelegraph; Translator: Tao Zhu, Golden Finance

When former US President Joe Biden left office, his cryptocurrency resume was mixed, with both tough regulatory crackdowns and huge strides in institutional adoption.

On January 20, pro-cryptocurrency President Donald Trump began his presidency. While Trump declared plans to make the United States the “crypto capital of the world,” Biden’s stance on cryptocurrencies is more ambivalent.

Under Biden, a Democrat, US financial regulators have filed dozens of lawsuits against industry companies for alleged violations of the law. On the other hand, they have also paved the way for institutional adoption, approving a number of regulated crypto products and custodians.

The four years of cryptocurrency development have been uneven. Decentralized finance (DeFi) has been effectively banned from the US market, and exchanges have struggled. Meanwhile, spot crypto exchange-traded funds (ETFs), tokenized U.S. Treasuries, and dollar-backed stablecoins have surged.

Biden vs. Trump on crypto policy. Source: Galaxy Research

Regulatory Crackdown

In 2021, Biden appointed Gary Gensler to serve as chairman of the Securities and Exchange Commission, the top U.S. financial regulator. Gensler resigned as chairman of the SEC on January 20, the day Trump’s presidency began.

Under Gensler’s leadership, the SEC and its sister agency, the Commodity Futures Trading Commission (CFTC), have filed more than 100 legal actions against cryptocurrency companies. Targets include cryptocurrency exchange Coinbase, DeFi protocol Uniswap, and infrastructure provider Consensys.

Gensler accused the companies of failing to register as securities brokers or exchanges, claiming that this “deprives investors of important protections, including SEC examinations, recordkeeping requirements, and safeguards against conflicts of interest.”

Industry executives say the agency’s practices have “hindered our industry for years, limiting potential technological innovation and services,” Coinbase Chief Legal Officer Paul Grewal said in a Jan. 17 post on the X platform.

In 2024, about 30 cryptocurrency executives accused the Biden administration of limiting cryptocurrency companies’ access to banking services through regulators at the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC).

Galaxy Research believes Trump is more supportive of cryptocurrency than Biden and his Vice President Kamala Harris, who are running against Trump in 2024.

Spot Bitcoin ETF assets exceeded $100 billion in November. Source: Eric Balchunas

Institutional Adoption

Despite the Biden administration’s tough enforcement stance, he has also presided over key developments in institutional crypto adoption and the tokenization of real-world assets (RWAs).

In January and July of this year, the SEC approved more than a dozen spot Bitcoin and Ethereum ETFs for listing on U.S. markets, respectively.

Since then, cryptocurrency ETFs have dominated the ETF space, with net assets in spot Bitcoin ETFs surpassing $100 billion in November. BlackRock, the world’s largest asset manager, now recommends allocating up to 2% of a portfolio to Bitcoin.

“The availability of digital assets in ETF wrappers is absolutely a game changer,” Will McGough, investment director at Prime Capital Financial, a $24 billion registered investment adviser based in Overland Park, Kansas, noted in July.

“The ability to access these investments through regular investment channels could lead to broader adoption over time.”

Meanwhile, regulated digital asset custodians in the U.S. have proliferated under Biden’s tenure, with firms including Coinbase Custody Trust, Fidelity Digital Asset Services and Anchorage Digital Bank now authorized to custody assets for U.S. clients.

Dozens of other crypto products have also joined the fray, from options contracts on spot bitcoin ETFs to swaps and futures pegged to meme coins like Dogecoin and Bonk.

Tokenized U.S. Treasury TVL has expanded during the Biden administration. Source: RWA.xyz

Tokenization

Advances are not limited to traditional financial products. In 2021, asset manager Franklin Templeton launched the Franklin OnChain U.S. Government Money Fund (FOBXX), a tokenized money fund initially launched on the Stellar network.

This is the first time the SEC has allowed an investment vehicle to rely on a blockchain network’s distributed ledger technology for recordkeeping.

U.S. tokenized money funds, including the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), now have a total locked value (TVL) of more than $3.5 billion, according to data service RWA.xyz.

Meanwhile, USDC, a dollar-backed stablecoin regulated by the U.S. Treasury, has seen total holdings surge to about $45 billion during the Biden administration.

In 2024, the U.S. Treasury Department recognized that tokenization "has the potential to unlock new economic arrangements and increase efficiencies" and is currently considering tokenizing U.S. Treasuries.

Meanwhile, the CFTC began exploring the use of cryptocurrencies as trading collateral on derivatives exchanges.